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San Jose Estate Law Blog

Making changes to your will after a divorce

We recently wrote about some of the ways in which closing or launching a business can affect one's estate plan, but there are many other reasons why it may be necessary to go over your estate plan. For example, if you are in the middle of a divorce or you recently parted ways with your spouse, you may need to make key revisions to your will. There are a number of reasons why these revisions are so important and you may need to make multiple changes in the wake of a divorce.

For starters, many people give their spouse certain responsibilities and authority over their estate plan, and this may need to be revoked following a divorce. Other changes may need to be made when it comes to beneficiaries and the manner in which an estate is distributed. Not only do some people need to change their will to remove their ex as a beneficiary, but they may also need to remove other beneficiaries as a result of the divorce.

Revising your estate plan due to starting or closing a business

There are many different reasons why it becomes necessary for people to go over their estate plan, whether they split up with their spouse, they want to remove a beneficiary or they adopt children. However, business issues, such as starting or closing a business, can also necessitate the revision of an estate plan. Whether you are an entrepreneur who is excited to launch a new business or you have decided to shut down your business after years of operation, it is pivotal to be mindful of how this move could affect your finances (and your financial future) and why it is so crucial to make sure that you adjust your estate plan accordingly.

A number of matters may need to be taken into consideration if you are dealing with the closure or launch of a business you own. For example, you may need to consider how your business will be affected by an unexpected health crisis that you may deal with in the future, and whether your loved ones will be able to keep things moving forward smoothly. Or, your financial position may have changed considerably as a result of closing your business, and you may need to adjust your estate plan accordingly.

How do estate sales work?

When your parents move to an assisted living facility or pass away, you can be left with many personal items you have no room or use for. What can you do with the extra furniture, china and silver, clothing, jewelry and knick-knacks that your parents left behind? Like many California residents in the same situation, you can give these items to charity, put them in storage or haul them to the dump – or you can hold an estate sale.

What is an estate sale, you may wonder? According to HowStuffWorks, estate sales are a step up from a garage or yard sale. Often, the contents of a home are sold or auctioned off. It is not uncommon for high-end items to be listed in an estate sale. These sales are usually held after the owner of an estate dies, but if you have permission from your parents or if you have power of attorney, you may decide to sell their unnecessary items if they become incapacitated and will not use these possessions again.

What is a probate referee?

The estate administration process in San Jose can often become contentious. While you and all others who are party to an estate may start out with the stated intention of avoiding discord, you may be surprised at how quickly it can arise when people fear that their interests may be affected. One area that many may disagree over is in the valuation of an estate's assets. If you have been asked to serve as the executor of an estate, then you may feel overwhelmed at the prospect of trying to come up with an accurate appraisal on your own. Fortunately, you do not have to; the state will typically assign a probate referee to handle that task. 

What is a probate referee? It is a professional assigned by the county in which an estate is being probated (typically a lawyer, accountant or person with extensive appraisal experience) to come up with a reliable valuation of an estate's assets. A probate referee will evaluate everything from real estate and investment accounts to automobiles and art collections. According to the California State Controller's Office, probate referees are required to seek at least 15 hours of continuing education every year so that they can remain up-to-date with the latest appraisal techniques and consumer market trends. 

Preparing to manage estate taxes

You may have resigned yourself to the notion of having your estate taxed as being an inevitability. Many in San Jose come to us here at Temmerman, Cilley & Kohlmann, LLP with the same assumption, as well as concerns that having to pay tax will leave little to go their beneficiaries. Yet despite the seeming inescapability from death and taxes, you may be pleasantly surprised to learn that there is a strong possibility your estate will not even be taxed at all. 

The federal government has established an estate tax exemption that allows your estate to avoid being taxed as long as its total taxable does not exceed the threshold amount (in 2019, that amount is $11.4 million). It is for this reason that many (even a majority of) estates are not subject to federal estate taxes. Indeed, projections released by the Internal Revenue Service show that only 31,700 estate tax returns are expected to be filed in 2019. 

Spendthrift trusts can allow for responsible financial habits

Many families across California can identify with having children, grandchildren or other beneficiaries that failed to inherit the same diligent savings habits as their parents or grandparents. As you plan your estate, you may worry about how these loved ones may cope with a sudden increase in wealth.

Fortunately, there are options for you to proactively plan for such situations. Spendthrift trusts, or trusts with a spendthrift clause or provision, allow you to do just this. While your loved one will still receive the assets intended for them, they will receive such assets in periodic distributions set according to your customized terms.

What is a living will?

In all likelihood, you have some pretty specific ideas about the type of medical care and treatment you want and do not want at the end of your life. But who will carry out your wishes when the time comes if you are too ill or incapacitated to make your wishes known? This is where a California living will can serve you well.

As FindLaw explains, your living will is considerably different than a “normal” will. In your regular will you specify who you want to receive your various pieces of property when you die. In your living will, however, you specify what types of medical care and treatments you want and do not want when your life comes to an end.

What happens if you die in debt?

With more people in California over the age of 75 accruing credit card debt and mortgages than in previous decades, it is becoming increasingly likely that you may leave debts behind for your heirs rather than assets. If you are in debt, it can be difficult to look beyond the present, but estate planning is still important at this stage. Specifically, it is important to take steps to protect your loved ones from having to pay off your creditors.

Many older parents who own property choose to transfer it to their adult children or add their names to the deed in the hopes of avoiding probate costs and/or attention from creditors. However, according to the Seattle Times, this is an estate planning mistake that can potentially cause them legal and tax problems after you are gone. There are other, better ways to avoid probate and protect what assets you do have from creditors. 

What if one dies without a will?

Experts counsel people both in San Jose and throughout the rest of the U.S. to see to their estate planning early on in their adult lives. Yet even so, many American adults do not have a will. What happens, then, if you have a family member dies without ever preparing one? In such a case, their estate becomes subject to intestate succession. "Intestate" is the word applied to cases where one dies without a will, and the terms regarding how their estate will be dispersed are set forth by the state. 

California's guidelines regarding intestate succession can be found in Sections 6400-6414 of the state's Probate Code. Here it states that if the decedent was your spouse, you are entitled automatically entitled to one-half of the community and quasi-community property the two of you shared. Your deceased spouse's portion of that property would then be included in their separate property. you would also be entitled to the full amount of that separate property if your spouse has no surviving issue (direct descendants), parents or siblings. If they have one surviving descendant, parent or sibling, you would then receive one-half of their separate property, while the other half would go to that party. Your share of the separate property would lower to one-third if they have multiple surviving issue or direct family relations. 

The importance of succession planning for family businesses

Running a family business comes with a lot of day-to-day demands. So, the owners of such companies may have their thoughts fixed on the present. However, it can be critical for such owners to also plan for the future. This includes having plans for what will happen with the business when they are no longer running it.

This is called succession planning, and failing to do it could create a lot of problems for a family business. If the owners of such a company retire, become incapacitated or die without having a firm succession plan in place, it could lead to confusion and in-fighting among the owners’ family and loved ones over what will happen with the company. This could both be damaging to the company and create a lot of tension and conflict within a family.

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